• Kearny Financial Corp. Announces Second Quarter Fiscal 2023 Results and Declaration of Cash Dividend

    Source: Nasdaq GlobeNewswire / 26 Jan 2023 08:30:01   America/New_York

    FAIRFIELD, N.J., Jan. 26, 2023 (GLOBE NEWSWIRE) -- Kearny Financial Corp. (NASDAQ GS: KRNY) (the “Company”), the holding company of Kearny Bank (the “Bank”), reported net income for the quarter ended December 31, 2022 of $2.0 million, or $0.03 per diluted share, compared to $16.5 million, or $0.25 per diluted share, for the quarter ended September 30, 2022. The decrease in net income and earnings per share for the quarter was largely attributable to a previously announced after-tax loss of $10.8 million on the sale of securities.

    The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.11 per share, payable on February 22, 2023 to stockholders of record as of February 8, 2023.

    Craig L. Montanaro, President and Chief Executive Officer, commented, “During the quarter ended December 31, 2022, in light of the challenges presented by the prevailing economic and interest rate environment, we completed the restructuring of a portion of our investment securities portfolio and adopted a company-wide operating efficiency initiative targeting a five to ten percent reduction in our annual operating expense. While these initiatives resulted in the recognition of various non-recurring charges, which adversely impacted this quarter’s net income, they are a part of our strategy to position ourselves for future earnings improvement, irrespective of the macro-economic environment.”

    Balance Sheet

    • Total assets increased $399.7 million, or 5.1%, to $8.29 billion at December 31, 2022, from $7.89 billion at September 30, 2022.
    • Loans receivable increased $327.8 million, or 5.8%, to $5.98 billion at December 31, 2022, from $5.66 billion at September 30, 2022.
    • Investment securities increased $61.0 million to $1.44 billion, or 17.4% of total assets, at December 31, 2022, from $1.38 billion, or 17.5% of total assets, at September 30, 2022.
    • Deposits decreased $136.9 million, or 2.2%, to $5.97 billion at December 31, 2022, from $6.11 billion at September 30, 2022.
    • Borrowings increased $532.1 million to $1.38 billion, or 16.7% of total assets, at December 31, 2022, from $851.5 million, or 10.8% of total assets, at September 30, 2022.

    Earnings

    Performance Highlights

    • Return on average assets was 0.10% for the quarter ended December 31, 2022 compared to 0.85% for the quarter ended September 30, 2022.
    • Return on average equity was 0.90% and 7.38% for the quarters ended December 31, 2022 and September 30, 2022, respectively. Return on average tangible equity was 1.20% and 9.70% for those same comparative periods.

    Net Interest Income and Net Interest Margin

    • Net interest margin contracted 31 basis points to 2.38% for the quarter ended December 31, 2022, from 2.69% for the quarter ended September 30, 2022. The decrease was due largely to increases in the cost and average balance of interest-bearing liabilities, partially offset by increases in the yield and average balance of interest-earning assets.
    • Net interest income decreased $3.7 million to $44.8 million for the quarter ended December 31, 2022, from $48.5 million for the quarter ended September 30, 2022. Included in net interest income for the quarters ended December 31, 2022 and September 30, 2022, respectively, was purchase accounting accretion of $1.9 million and $1.8 million, and loan prepayment penalty income of $166,000 and $441,000.

    Non-Interest Income

    • Non-interest income decreased $14.4 million to a loss of $8.5 million for the quarter ended December 31, 2022, from income of $5.9 million for the quarter ended September 30, 2022. The decrease was primarily attributable to a loss of $15.2 million on the sale of securities for the quarter ended December 31, 2022.
    • Income from bank owned life insurance decreased $1.9 million for the quarter ended December 31, 2022 as a result of $2.1 million in payouts on life insurance policies in the prior comparative period.
    • Included in other income, during the quarter ended December 31, 2022, was a non-recurring gain of $2.9 million attributable to the sale of a former branch location.

    Non-Interest Expense

    • Non-interest expense increased $662,000 to $32.7 million for the quarter ended December 31, 2022, from $32.0 million for the quarter ended September 30, 2022. The increase was primarily attributable to $757,000 of non-recurring severance expense resulting from a workforce realignment.
    • Other expense increased $684,000, largely due to a $353,000 increase in the provision for credit losses on unfunded commitments, a $230,000 increase in professional fees and a $147,000 increase in OREO expenses.
    • Federal deposit insurance premium expense increased $320,000 to $1.2 million for the quarter ended December 31, 2022, largely driven by asset growth.
    • Salaries and benefits expense decreased $427,000 to $19.9 million for the quarter ended December 31, 2022. This decrease was driven by lower salary, payroll tax and incentive compensation expense. Partially offsetting these decreases were non-recurring severance expense resulting from a workforce realignment and an increase in incentive payments tied to loan origination volume.
    • The efficiency and non-interest expense ratios were 89.93% and 1.62%, respectively, for the quarter ended December 31, 2022, as compared to 58.75% and 1.65%, respectively, for the quarter ended September 30, 2022.

    Income Taxes

    • Income tax expense totaled $33,000 for the quarter ended December 31, 2022 compared to $5.3 million for the quarter ended September 30, 2022, resulting in an effective tax rate of 1.7% and 24.1%, respectively. The decrease in the effective tax rate was primarily due to a year-to-date tax rate true-up which resulted from the loss on the sale of securities during the current quarter. The loss lowered the Company’s full year projected taxable income and income tax provision.

    Asset Quality

    • The balance of non-performing assets decreased $14.8 million to $62.6 million, or 0.76% of total assets, at December 31, 2022, from $77.4 million, or 0.98% of total assets, at September 30, 2022. The decrease in non-performing assets was primarily attributable to loans previously on non-accrual returning to accrual status. During the current period, the Company acquired a $13.0 million nonresidential real estate property through foreclosure, which is included in the balance of non-performing assets.
    • Net charge-offs totaled $407,000, or 0.03% of average loans, on an annualized basis, for the quarter ended December 31, 2022, compared to $115,000, or 0.01% of average loans, on an annualized basis, for the quarter ended September 30, 2022.
    • For the quarter ended December 31, 2022, the Company recorded a provision for credit losses of $1.7 million, compared to $670,000 for the quarter ended September 30, 2022. The provision for the quarter ended December 31, 2022 was largely driven by loan growth, partially offset by a reduction in the qualitative component of the Company’s allowance for credit losses.
    • The allowance for credit losses was $48.9 million, or 0.81% of total loans, at December 31, 2022, compared to $47.6 million, or 0.84% of total loans, at September 30, 2022.

    Capital

    • For the quarter ended December 31, 2022, book value per share increased $0.07, or 0.5%, to $12.95 and tangible book value per share increased $0.05, or 0.5%, to $9.78.
    • During the quarter ended December 31, 2022, the Company repurchased 549,800 shares of common stock at a cost of $5.7 million, or $10.45 per share.
    • At December 31, 2022, the Company’s tangible equity to tangible assets ratio equaled 8.16% and the regulatory capital ratios of both the Company and the Bank were in excess of the levels required by federal banking regulators to be classified as “well-capitalized” under regulatory guidelines.

    Statements contained in this news release that are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

    In addition, the COVID-19 pandemic has had, and may continue to have, an adverse impact on the Company, its clients and the communities it serves. Given its dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business.

    For further information contact:
    Craig L. Montanaro, President and Chief Executive Officer, or
    Keith Suchodolski, Senior Executive Vice President and Chief Financial Officer
    Kearny Financial Corp.
    (973) 244-4500

    Category: Earnings

    Linked-Quarter Comparative Financial Analysis

    Kearny Financial Corp.
    Consolidated Balance Sheets
    (Unaudited)

    (Dollars and Shares in Thousands,
    Except Per Share Data)    		December 31,
    2022    		September 30,
    2022    		Variance
    or Change    		Variance
    or Change Pct.
    Assets    
    Cash and cash equivalents$75,660 $96,076 $(20,416)-21.2%
    Securities available for sale 1,286,354  1,263,176  23,178 1.8%
    Securities held to maturity 153,786  115,943  37,843 32.6%
    Loans held-for-sale 12,940  12,936  4 —%
    Loans receivable 5,984,133  5,656,370  327,763 5.8%
    Less: allowance for credit losses on loans (48,877) (47,613) 1,264 2.7%
    Net loans receivable 5,935,256  5,608,757  326,499 5.8%
    Premises and equipment 50,953  52,642  (1,689)-3.2%
    Federal Home Loan Bank stock 69,022  44,957  24,065 53.5%
    Accrued interest receivable 27,368  23,817  3,551 14.9%
    Goodwill 210,895  210,895  — —%
    Core deposit intangible 2,732  2,876  (144)-5.0%
    Bank owned life insurance 289,673  289,690  (17)—%
    Deferred income taxes, net 51,107  54,278  (3,171)-5.8%
    Other real estate owned 13,410  178  13,232 7433.7%
    Other assets 110,162  113,369  (3,207)-2.8%
    Total assets$8,289,318 $7,889,590 $399,728 5.1%
         
    Liabilities    
    Deposits:    
    Non-interest-bearing$650,950 $683,406 $(32,456)-4.7%
    Interest-bearing 5,320,421  5,424,872  (104,451)-1.9%
    Total deposits 5,971,371  6,108,278  (136,907)-2.2%
    Borrowings 1,383,573  851,454  532,119 62.5%
    Advance payments by borrowers for taxes 17,307  16,555  752 4.5%
    Other liabilities 44,427  38,329  6,098 15.9%
    Total liabilities 7,416,678  7,014,616  402,062 5.7%
         
    Stockholders' Equity    
    Common stock 674  680  (6)-0.9%
    Paid-in capital 515,332  520,245  (4,913)-0.9%
    Retained earnings 449,489  454,710  (5,221)-1.1%
    Unearned ESOP shares (23,834) (24,321) 487 2.0%
    Accumulated other comprehensive loss (69,021) (76,340) 7,319 9.6%
    Total stockholders' equity 872,640  874,974  (2,334)-0.3%
    Total liabilities and stockholders' equity$8,289,318 $7,889,590 $399,728 5.1%
         
    Consolidated capital ratios    
    Equity to assets 10.53% 11.09% -0.56% 
    Tangible equity to tangible assets (1) 8.16% 8.61% -0.45% 
         
    Share data    
    Outstanding shares 67,388  67,938  (550)-0.8%
    Book value per share$12.95 $12.88 $0.07 0.5%
    Tangible book value per share (2)$9.78 $9.73 $0.05 0.5%

    _________________________

    (1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets. Tangible assets equals total assets reduced by goodwill and core deposit intangible assets.
    (2) Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets.


    Kearny Financial Corp.
    Consolidated Statements of Income
    (Unaudited)

    (Dollars and Shares in Thousands,
    Except Per Share Data)

    		Three Months EndedVariance
    or Change
    		Variance
    or Change Pct.
    December 31,
    2022    		September 30,
    2022
    Interest income    
    Loans$57,996 $52,935 $5,061 9.6%
    Taxable investment securities 13,221  10,439  2,782 26.7%
    Tax-exempt investment securities 219  285  (66)-23.2%
    Other interest-earning assets 1,005  761  244 32.1%
    Total interest income 72,441  64,420  8,021 12.5%
         
    Interest expense    
    Deposits 18,822  10,869  7,953 73.2%
    Borrowings 8,836  5,020  3,816 76.0%
    Total interest expense 27,658  15,889  11,769 74.1%
    Net interest income 44,783  48,531  (3,748)-7.7%
    Provision for credit losses 1,671  670  1,001 149.4%
    Net interest income after provision for credit losses 43,112  47,861  (4,749)-9.9%
         
    Non-interest income    
    Fees and service charges 734  763  (29)-3.8%
    Loss on sale and call of securities (15,227) —  (15,227)—%
    Gain on sale of loans 134  395  (261)-66.1%
    Income from bank owned life insurance 1,761  3,698  (1,937)-52.4%
    Electronic banking fees and charges 397  506  (109)-21.5%
    Other income 3,723  555  3,168 570.8%
    Total non-interest income (8,478) 5,917  (14,395)-243.3%
         
    Non-interest expense    
    Salaries and employee benefits 19,921  20,348  (427)-2.1%
    Net occupancy expense of premises 2,987  3,090  (103)-3.3%
    Equipment and systems 3,867  3,662  205 5.6%
    Advertising and marketing 731  747  (16)-2.1%
    Federal deposit insurance premium 1,226  906  320 35.3%
    Directors' compensation 339  340  (1)-0.3%
    Other expense 3,579  2,895  684 23.6%
    Total non-interest expense 32,650  31,988  662 2.1%
    Income before income taxes 1,984  21,790  (19,806)-90.9%
    Income taxes 33  5,255  (5,222)-99.4%
    Net income$1,951 $16,535 $(14,584)-88.2%
         
    Net income per common share (EPS)    
    Basic$0.03 $0.25 $(0.22) 
    Diluted$0.03 $0.25 $(0.22) 
         
    Dividends declared    
    Cash dividends declared per common share$0.11 $0.11 $—  
    Cash dividends declared$7,172 $7,276 $(104) 
    Dividend payout ratio 367.6% 44.0% 323.6% 
         
    Weighted average number of common shares outstanding    
    Basic 65,030  65,737  (707) 
    Diluted 65,038  65,756  (718) 
               


    Kearny Financial Corp.
    Average Balance Sheet Data
    (Unaudited)

    (Dollars in Thousands)

    		Three Months EndedVariance
    or Change
    		Variance
    or Change Pct.
    December 31,
    2022    		September 30,
    2022
    Assets    
    Interest-earning assets:    
    Loans receivable, including loans held for sale$5,839,903 $5,553,996 $285,907 5.1%
    Taxable investment securities 1,527,578  1,516,974  10,604 0.7%
    Tax-exempt investment securities 37,917  48,973  (11,056)-22.6%
    Other interest-earning assets 114,175  88,038  26,137 29.7%
    Total interest-earning assets 7,519,573  7,207,981  311,592 4.3%
    Non-interest-earning assets 550,519  570,225  (19,706)-3.5%
    Total assets$8,070,092 $7,778,206 $291,886 3.8%
         
    Liabilities and Stockholders' Equity    
    Interest-bearing liabilities:    
    Deposits:    
    Interest-bearing demand$2,359,977 $2,354,340 $5,637 0.2%
    Savings 931,584  1,019,343  (87,759)-8.6%
    Certificates of deposit 2,192,722  2,014,922  177,800 8.8%
    Total interest-bearing deposits 5,484,283  5,388,605  95,678 1.8%
    Borrowings:    
    Federal Home Loan Bank advances 997,148  642,399  354,749 55.2%
    Other borrowings —  127,456  (127,456)-100.0%
    Total borrowings 997,148  769,855  227,293 29.5%
    Total interest-bearing liabilities 6,481,431  6,158,460  322,971 5.2%
    Non-interest-bearing liabilities:    
    Non-interest-bearing deposits 666,846  667,624  (778)-0.1%
    Other non-interest-bearing liabilities 56,721  56,431  290 0.5%
    Total non-interest-bearing liabilities 723,567  724,055  (488)-0.1%
    Total liabilities 7,204,998  6,882,515  322,483 4.7%
    Stockholders' equity 865,094  895,691  (30,597)-3.4%
    Total liabilities and stockholders' equity$8,070,092 $7,778,206 $291,886 3.8%
         
    Average interest-earning assets to average interest-bearing liabilities 116.02% 117.04% -1.02%-0.9%
                


    Kearny Financial Corp.
    Performance Ratio Highlights
    (Unaudited)

     Three Months EndedVariance
    or Change
     December 31,
    2022    		September 30,
    2022
    Average yield on interest-earning assets:   
    Loans receivable, including loans held for sale3.97%3.81%0.16%
    Taxable investment securities3.46%2.75%0.71%
    Tax-exempt investment securities (1)2.32%2.33%-0.01%
    Other interest-earning assets3.52%3.46%0.06%
    Total interest-earning assets3.85%3.57%0.28%
        
    Average cost of interest-bearing liabilities:   
    Deposits:   
    Interest-bearing demand1.63%0.92%0.71%
    Savings0.41%0.23%0.18%
    Certificates of deposit1.50%0.97%0.53%
    Total interest-bearing deposits1.37%0.81%0.56%
    Borrowings:   
    Federal Home Loan Bank advances3.54%2.68%0.86%
    Other borrowings—%2.26%-2.26%
    Total borrowings3.54%2.61%0.93%
    Total interest-bearing liabilities1.71%1.03%0.68%
        
    Interest rate spread (2)2.14%2.54%-0.40%
    Net interest margin (3)2.38%2.69%-0.31%
        
    Non-interest income to average assets (annualized)-0.42%0.30%-0.72%
    Non-interest expense to average assets (annualized)1.62%1.65%-0.03%
        
    Efficiency ratio (4)89.93%58.75%31.18%
        
    Return on average assets (annualized)0.10%0.85%-0.75%
    Return on average equity (annualized)0.90%7.38%-6.48%
    Return on average tangible equity (annualized) (5)1.20%9.70%-8.50%

    _________________________

    (1) The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
    (2) Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
    (3) Net interest income divided by average interest-earning assets.
    (4) Non-interest expense divided by the sum of net interest income and non-interest income.
    (5) Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.


     
    Five-Quarter Financial Trend Analysis

    Kearny Financial Corp.
    Consolidated Balance Sheets

    (Dollars and Shares in Thousands,
    Except Per Share Data)    		December 31,
    2022    		September 30,
    2022    		June 30,
    2022    		March 31,
    2022    		December 31,
    2021
     (Unaudited)(Unaudited)(Audited)(Unaudited)(Unaudited)
    Assets     
    Cash and cash equivalents$75,660 $96,076 $101,615 $62,379 $60,452 
    Securities available for sale 1,286,354  1,263,176  1,344,093  1,526,086  1,591,066 
    Securities held to maturity 153,786  115,943  118,291  121,853  53,142 
    Loans held-for-sale 12,940  12,936  28,874  2,822  12,549 
    Loans receivable 5,984,133  5,656,370  5,417,845  5,003,201  4,826,404 
    Less: allowance for credit losses on loans (48,877) (47,613) (47,058) (43,860) (48,216)
    Net loans receivable 5,935,256  5,608,757  5,370,787  4,959,341  4,778,188 
    Premises and equipment 50,953  52,642  53,281  53,727  54,067 
    Federal Home Loan Bank stock 69,022  44,957  47,144  30,997  36,622 
    Accrued interest receivable 27,368  23,817  20,466  19,517  18,495 
    Goodwill 210,895  210,895  210,895  210,895  210,895 
    Core deposit intangible 2,732  2,876  3,020  3,166  3,344 
    Bank owned life insurance 289,673  289,690  289,177  287,644  286,433 
    Deferred income taxes, net 51,107  54,278  49,350  34,349  25,709 
    Other real estate owned 13,410  178  178  401  658 
    Other assets 110,162  113,369  82,712  76,714  54,603 
    Total assets$8,289,318 $7,889,590 $7,719,883 $7,389,891 $7,186,223 
          
    Liabilities     
    Deposits:     
    Non-interest-bearing$650,950 $683,406 $653,899 $621,954 $604,805 
    Interest-bearing 5,320,421  5,424,872  5,208,357  4,906,708  4,849,220 
    Total deposits 5,971,371  6,108,278  5,862,256  5,528,662  5,454,025 
    Borrowings 1,383,573  851,454  901,337  851,220  686,105 
    Advance payments by borrowers for taxes 17,307  16,555  16,746  16,979  16,772 
    Other liabilities 44,427  38,329  45,544  37,861  33,851 
    Total liabilities 7,416,678  7,014,616  6,825,883  6,434,722  6,190,753 
          
    Stockholders' Equity     
    Common stock 674  680  687  714  735 
    Paid-in capital 515,332  520,245  528,396  561,176  587,392 
    Retained earnings 449,489  454,710  445,451  441,522  431,549 
    Unearned ESOP shares (23,834) (24,321) (24,807) (25,294) (25,780)
    Accumulated other comprehensive (loss) income (69,021) (76,340) (55,727) (22,949) 1,574 
    Total stockholders' equity 872,640  874,974  894,000  955,169  995,470 
    Total liabilities and stockholders' equity$8,289,318 $7,889,590 $7,719,883 $7,389,891 $7,186,223 
          
    Consolidated capital ratios     
    Equity to assets 10.53% 11.09% 11.58% 12.93% 13.85%
    Tangible equity to tangible assets (1) 8.16% 8.61% 9.06% 10.33% 11.21%
          
    Share data     
    Outstanding shares 67,388  67,938  68,666  71,424  73,453 
    Book value per share$12.95 $12.88 $13.02 $13.37 $13.55 
    Tangible book value per share (2)$9.78 $9.73 $9.90 $10.38 $10.64 

    _________________________

    (1) Tangible equity equals total stockholders' equity reduced by goodwill and core deposit intangible assets. Tangible assets equals total assets reduced by goodwill and core deposit intangible assets.
    (2) Tangible book value equals total stockholders' equity reduced by goodwill and core deposit intangible assets.


    Kearny Financial Corp.
    Supplemental Balance Sheet Highlights
    (Unaudited)

    (Dollars in Thousands)December 31,
    2022    		September 30,
    2022    		June 30,
    2022    		March 31,
    2022    		December 31,
    2021
    Loan portfolio composition:     
    Commercial loans:     
    Multi-family mortgage$2,851,721 $2,570,297 $2,409,090 $2,076,003 $2,007,431 
    Nonresidential mortgage 1,017,341  1,040,688  1,019,838  1,085,988  1,026,447 
    Commercial business 177,530  186,361  176,807  169,551  180,429 
    Construction 186,663  166,052  140,131  121,137  110,703 
    Total commercial loans 4,233,255  3,963,398  3,745,866  3,452,679  3,325,010 
    One- to four-family residential mortgage 1,719,514  1,666,730  1,645,816  1,527,980  1,477,267 
    Consumer loans:     
    Home equity loans 45,690  43,269  42,028  41,501  43,934 
    Other consumer 2,648  2,869  2,866  2,755  3,040 
    Total consumer loans 48,338  46,138  44,894  44,256  46,974 
    Total loans, excluding yield adjustments 6,001,107  5,676,266  5,436,576  5,024,915  4,849,251 
    Unaccreted yield adjustments (16,974) (19,896) (18,731) (21,714) (22,847)
    Loans receivable, net of yield adjustments 5,984,133  5,656,370  5,417,845  5,003,201  4,826,404 
    Less: allowance for credit losses on loans (48,877) (47,613) (47,058) (43,860) (48,216)
    Net loans receivable$5,935,256 $5,608,757 $5,370,787 $4,959,341 $4,778,188 
          
    Asset quality:     
    Nonperforming assets:     
    Accruing loans - 90 days and over past due$— $— $— $— $— 
    Nonaccrual loans 40,549  68,574  70,321  80,595  72,138 
    Total nonperforming loans 40,549  68,574  70,321  80,595  72,138 
    Nonaccrual loans held-for-sale 8,650  8,650  21,745  —  — 
    Other real estate owned 13,410  178  178  401  658 
    Total nonperforming assets$62,609 $77,402 $92,244 $80,996 $72,796 
          
    Nonperforming loans (% total loans) 0.68% 1.21% 1.30% 1.61% 1.49%
    Nonperforming assets (% total assets) 0.76% 0.98% 1.19% 1.10% 1.01%
          
    Classified loans$86,069 $92,610 $94,555 $163,621 $162,174 
          
    Allowance for credit losses on loans (ACL):     
    ACL to total loans 0.81% 0.84% 0.87% 0.87% 0.99%
    ACL to nonperforming loans 120.54% 69.43% 66.92% 54.42% 66.84%
    Net charge-offs$407 $115 $1,024 $436 $1,149 
    Average net charge-off rate (annualized) 0.03% 0.01% 0.08% 0.04% 0.10%
          
    Funding composition:     
    Deposits:     
    Non-interest-bearing deposits$650,950 $683,406 $653,899 $621,954 $604,805 
    Interest-bearing demand 2,316,485  2,382,411  2,265,597  2,154,488  2,106,693 
    Savings 901,514  982,916  1,053,198  1,088,974  1,087,740 
    Certificates of deposit (retail) 1,354,907  1,263,124  1,116,035  1,122,228  1,184,530 
    Certificates of deposit (brokered and listing service) 747,515  796,421  773,527  541,018  470,257 
    Interest-bearing deposits 5,320,421  5,424,872  5,208,357  4,906,708  4,849,220 
    Total deposits 5,971,371  6,108,278  5,862,256  5,528,662  5,454,025 
          
    Borrowings:     
    Federal Home Loan Bank advances 1,256,573  796,454  651,337  541,220  666,105 
    Overnight borrowings 127,000  55,000  250,000  310,000  20,000 
    Total borrowings 1,383,573  851,454  901,337  851,220  686,105 
          
    Total funding$7,354,944 $6,959,732 $6,763,593 $6,379,882 $6,140,130 
          
    Loans as a % of deposits 99.6% 92.0% 92.1% 89.8% 87.8%
    Deposits as a % of total funding 81.2% 87.8% 86.7% 86.7% 88.8%
    Borrowings as a % of total funding 18.8% 12.2% 13.3% 13.3% 11.2%
                    


    Kearny Financial Corp.
    Consolidated Statements of Income
    (Unaudited)

     Three Months Ended
    (Dollars and Shares in Thousands,
    Except Per Share Data)    		December 31,
    2022    		September 30,
    2022    		June 30,
    2022    		March 31,
    2022    		December 31,
    2021
    Interest income     
    Loans$57,996 $52,935 $48,869 $45,846 $47,575 
    Taxable investment securities 13,221  10,439  8,915  8,024  7,595 
    Tax-exempt investment securities 219  285  297  316  327 
    Other interest-earning assets 1,005  761  472  415  415 
    Total interest income 72,441  64,420  58,553  54,601  55,912 
          
    Interest expense     
    Deposits 18,822  10,869  3,915  3,565  3,663 
    Borrowings 8,836  5,020  4,039  3,309  3,562 
    Total interest expense 27,658  15,889  7,954  6,874  7,225 
    Net interest income 44,783  48,531  50,599  47,727  48,687 
    Provision for (reversal of) credit losses 1,671  670  4,222  (3,920) (2,420)
    Net interest income after provision for (reversal of) credit losses 43,112  47,861  46,377  51,647  51,107 
          
    Non-interest income     
    Fees and service charges 734  763  658  617  698 
    (Loss) gain on sale and call of securities (15,227) —  (563) 3  — 
    Gain on sale of loans 134  395  187  376  970 
    (Loss) gain on sale of other real estate owned —  —  (9) 14  — 
    Income from bank owned life insurance 1,761  3,698  1,533  1,511  1,562 
    Electronic banking fees and charges 397  506  366  432  421 
    Other income 3,723  555  638  238  482 
    Total non-interest income (8,478) 5,917  2,810  3,191  4,133 
          
    Non-interest expense     
    Salaries and employee benefits 19,921  20,348  20,367  19,184  18,096 
    Net occupancy expense of premises 2,987  3,090  3,188  3,223  3,156 
    Equipment and systems 3,867  3,662  4,516  3,822  3,723 
    Advertising and marketing 731  747  703  516  448 
    Federal deposit insurance premium 1,226  906  762  480  721 
    Directors' compensation 339  340  340  340  649 
    Other expense 3,579  2,895  3,736  3,058  2,877 
    Total non-interest expense 32,650  31,988  33,612  30,623  29,670 
    Income before income taxes 1,984  21,790  15,575  24,215  25,570 
    Income taxes 33  5,255  4,205  6,522  6,801 
    Net income$1,951 $16,535 $11,370 $17,693 $18,769 
          
    Net income per common share (EPS)     
    Basic$0.03 $0.25 $0.17 $0.25 $0.26 
    Diluted$0.03 $0.25 $0.17 $0.25 $0.26 
          
    Dividends declared     
    Cash dividends declared per common share$0.11 $0.11 $0.11 $0.11 $0.11 
    Cash dividends declared$7,172 $7,276 $7,441 $7,720 $7,921 
    Dividend payout ratio 367.6% 44.0% 65.4% 43.6% 42.2%
          
    Weighted average number of common shares outstanding     
    Basic 65,030  65,737  67,240  69,790  72,011 
    Diluted 65,038  65,756  67,276  69,817  72,037 
                    


    Kearny Financial Corp.
    Average Balance Sheet Data
    (Unaudited)

     Three Months Ended
    (Dollars in Thousands)December 31,
    2022    		September 30,
    2022    		June 30,
    2022    		March 31,
    2022    		December 31,
    2021
    Assets     
    Interest-earning assets:     
    Loans receivable, including loans held-for-sale$5,839,903 $5,553,996 $5,181,983 $4,850,236 $4,822,959 
    Taxable investment securities 1,527,578  1,516,974  1,608,372  1,620,996  1,610,395 
    Tax-exempt investment securities 37,917  48,973  51,672  55,390  57,686 
    Other interest-earning assets 114,175  88,038  87,990  79,644  77,811 
    Total interest-earning assets 7,519,573  7,207,981  6,930,017  6,606,266  6,568,851 
    Non-interest-earning assets 550,519  570,225  564,734  601,684  611,390 
    Total assets$8,070,092 $7,778,206 $7,494,751 $7,207,950 $7,180,241 
          
    Liabilities and Stockholders' Equity     
    Interest-bearing liabilities:     
    Deposits:     
    Interest-bearing demand$2,359,977 $2,354,340 $2,155,946 $2,133,977 $2,027,021 
    Savings 931,584  1,019,343  1,077,631  1,088,351  1,086,903 
    Certificates of deposit 2,192,722  2,014,922  1,701,725  1,650,048  1,693,423 
    Total interest-bearing deposits 5,484,283  5,388,605  4,935,302  4,872,376  4,807,347 
    Borrowings:     
    Federal Home Loan Bank advances 997,148  642,399  752,579  632,811  666,029 
    Other borrowings —  127,456  185,901  51,667  26,033 
    Total borrowings 997,148  769,855  938,480  684,478  692,062 
    Total interest-bearing liabilities 6,481,431  6,158,460  5,873,782  5,556,854  5,499,409 
    Non-interest-bearing liabilities:     
    Non-interest-bearing deposits 666,846  667,624  640,200  624,152  624,200 
    Other non-interest-bearing liabilities 56,721  56,431  56,636  49,455  50,870 
    Total non-interest-bearing liabilities 723,567  724,055  696,836  673,607  675,070 
    Total liabilities 7,204,998  6,882,515  6,570,618  6,230,461  6,174,479 
    Stockholders' equity 865,094  895,691  924,133  977,489  1,005,762 
    Total liabilities and stockholders' equity$8,070,092 $7,778,206 $7,494,751 $7,207,950 $7,180,241 
          
    Average interest-earning assets to average
    interest-bearing liabilities    		 116.02% 117.04% 117.98% 118.89% 119.45%
                    


    Kearny Financial Corp.
    Performance Ratio Highlights

     Three Months Ended
     December 31,
    2022    		September 30,
    2022    		June 30,
    2022    		March 31,
    2022    		December 31,
    2021
    Average yield on interest-earning assets:     
    Loans receivable, including loans held-for-sale3.97%3.81%3.77%3.78%3.95%
    Taxable investment securities3.46%2.75%2.22%1.98%1.89%
    Tax-exempt investment securities (1)2.32%2.33%2.30%2.28%2.26%
    Other interest-earning assets3.52%3.46%2.15%2.08%2.13%
    Total interest-earning assets3.85%3.57%3.38%3.31%3.40%
          
    Average cost of interest-bearing liabilities:     
    Deposits:     
    Interest-bearing demand1.63%0.92%0.31%0.22%0.22%
    Savings0.41%0.23%0.11%0.10%0.11%
    Certificates of deposit1.50%0.97%0.46%0.52%0.53%
    Total interest-bearing deposits1.37%0.81%0.32%0.29%0.30%
    Borrowings:     
    Federal Home Loan Bank advances3.54%2.68%1.96%2.08%2.14%
    Other borrowings—%2.26%0.77%0.17%0.09%
    Total borrowings3.54%2.61%1.72%1.93%2.06%
    Total interest-bearing liabilities1.71%1.03%0.54%0.49%0.53%
          
    Interest rate spread (2)2.14%2.54%2.84%2.82%2.87%
    Net interest margin (3)2.38%2.69%2.92%2.89%2.96%
          
    Non-interest income to average assets (annualized)-0.42%0.30%0.15%0.18%0.23%
    Non-interest expense to average assets (annualized)1.62%1.65%1.79%1.70%1.65%
          
    Efficiency ratio (4)89.93%58.75%62.93%60.14%56.17%
          
    Return on average assets (annualized)0.10%0.85%0.61%0.98%1.05%
    Return on average equity (annualized)0.90%7.38%4.92%7.24%7.46%
    Return on average tangible equity (annualized) (5)1.20%9.70%6.40%9.27%9.49%

    _________________________

    (1) The yield on tax-exempt investment securities has not been adjusted to reflect their tax-effective yield.
    (2) Interest income divided by average interest-earning assets less interest expense divided by average interest-bearing liabilities.
    (3) Net interest income divided by average interest-earning assets.
    (4) Non-interest expense divided by the sum of net interest income and non-interest income.
    (5) Average tangible equity equals total average stockholders’ equity reduced by average goodwill and average core deposit intangible assets.


    The following tables provide a reconciliation of certain financial measures calculated in accordance with Generally Accepted Accounting Principles (“GAAP”) (as reported) and non-GAAP measures. These non-GAAP measures provide additional information which allow readers to evaluate the ongoing performance of the Company. They are not a substitute for GAAP measures; they should be read and used in conjunction with the Company’s GAAP financial information. In all cases, it should be understood that non-GAAP per share measures do not depict amounts that accrue directly to the benefit of shareholders.

    Kearny Financial Corp.
    Reconciliation of GAAP to Non-GAAP
    (Unaudited)

     Three Months Ended
    (Dollars and Shares in Thousands,
    Except Per Share Data)    		December 31,
    2022    		September 30,
    2022    		June 30,
    2022    		March 31,
    2022    		December 31,
    2021
    Adjusted net income:     
    Net income (GAAP)$1,951 $16,535 $11,370 $17,693 $18,769 
    Non-recurring transactions - net of tax:     
    Net effect of sale and call of securities 10,811  —  400  (2) — 
    Net effect of sale of other assets (2,081) —  —  —  (251)
    Severance expense from workforce realignment 538  —  —  —  — 
    Branch consolidation expenses and impairment charges —  —  —  —  132 
    Adjusted net income$11,219 $16,535 $12,338 $17,691 $18,650 
          
    Calculation of pre-tax, pre-provision net revenue:     
    Net income (GAAP)$1,951 $16,535 $11,370 $17,693 $18,769 
    Adjustments to net income (GAAP):     
    Provision for income taxes 33  5,255  4,205  6,522  6,801 
    Provision for (reversal of) credit losses 1,671  670  4,222  (3,920) (2,420)
    Pre-tax, pre-provision net revenue (non-GAAP)$3,655 $22,460 $19,797 $20,295 $23,150 
          
    Adjusted earnings per share:     
    Weighted average common shares - basic 65,030  65,737  67,240  69,790  72,011 
    Weighted average common shares - diluted 65,038  65,756  67,276  69,817  72,037 
          
    Earnings per share - basic (GAAP)$0.03 $0.25 $0.17 $0.25 $0.26 
    Earnings per share - diluted (GAAP)$0.03 $0.25 $0.17 $0.25 $0.26 
          
    Adjusted earnings per share - basic (non-GAAP)$0.17 $0.25 $0.18 $0.25 $0.26 
    Adjusted earnings per share - diluted (non-GAAP)$0.17 $0.25 $0.18 $0.25 $0.26 
          
    Pre-tax, pre-provision net revenue per share:     
    Pre-tax, pre-provision net revenue per share - basic
    (non-GAAP)    		$0.06 $0.34 $0.29 $0.29 $0.32 
    Pre-tax, pre-provision net revenue per share - diluted
    (non-GAAP)    		$0.06 $0.34 $0.29 $0.29 $0.32 
          
    Adjusted return on average assets:     
    Total average assets$8,070,092 $7,778,206 $7,494,751 $7,207,950 $7,180,241 
          
    Return on average assets (GAAP) 0.10% 0.85% 0.61% 0.98% 1.05%
    Adjusted return on average assets (non-GAAP) 0.56% 0.85% 0.66% 0.98% 1.04%
          
    Adjusted return on average equity:     
    Total average equity$865,094 $895,691 $924,133 $977,489 $1,005,762 
          
    Return on average equity (GAAP) 0.90% 7.38% 4.92% 7.24% 7.46%
    Adjusted return on average equity (non-GAAP) 5.19% 7.38% 5.34% 7.24% 7.42%
                    


    Kearny Financial Corp.
    Reconciliation of GAAP to Non-GAAP
    (Unaudited)

     Three Months Ended
    (Dollars and Shares in Thousands,
    Except Per Share Data)    		December 31,
    2022    		September 30,
    2022    		June 30,
    2022    		March 31,
    2022    		December 31,
    2021
    Adjusted return on average tangible equity:     
    Total average equity$865,094 $895,691 $924,133 $977,489 $1,005,762 
    Less: average goodwill (210,895) (210,895) (210,895) (210,895) (210,895)
    Less: average other intangible assets (2,826) (2,971) (3,116) (3,282) (3,462)
    Total average tangible equity$651,373 $681,825 $710,122 $763,312 $791,405 
          
    Return on average tangible equity (non-GAAP) 1.20% 9.70% 6.40% 9.27% 9.49%
    Adjusted return on average tangible equity (non-GAAP) 6.89% 9.70% 6.95% 9.27% 9.43%
          
    Adjusted non-interest expense ratio:     
    Non-interest expense (GAAP)$32,650 $31,988 $33,612 $30,623 $29,670 
    Non-recurring transactions:     
    Severance expense from workforce realignment (757) —  —  —  — 
    Early contract termination —  —  (800) —  — 
    Branch consolidation expenses and impairment charges —  —  —  —  (187)
    Non-interest expense (non-GAAP)$31,893 $31,988 $32,812 $30,623 $29,483 
          
    Non-interest expense ratio (GAAP) 1.62% 1.65% 1.79% 1.70% 1.65%
    Adjusted non-interest expense ratio (non-GAAP) 1.58% 1.65% 1.75% 1.70% 1.64%
          
    Adjusted efficiency ratio:     
    Non-interest expense (non-GAAP)$31,893 $31,988 $32,812 $30,623 $29,483 
          
    Net interest income (GAAP)$44,783 $48,531 $50,599 $47,727 $48,687 
    Total non-interest income (GAAP) (8,478) 5,917  2,810  3,191  4,133 
    Non-recurring transactions:     
    Net effect of sale and call of securities 15,227  —  563  (3) — 
    Net effect of sale of other assets (2,931) —  —  —  (356)
    Total revenue (non-GAAP)$48,601 $54,448 $53,972 $50,915 $52,464 
          
    Efficiency ratio (GAAP) 89.93% 58.75% 62.93% 60.14% 56.17%
    Adjusted efficiency ratio (non-GAAP) 65.62% 58.75% 60.79% 60.15% 56.20%

     


    Primary Logo

Share on,